I ^3^ 




\ 



LIBRARY OF CONGRESS 




019 935 676 8 



Hollinger Corp. 
pH8.5 



p^ 



Protection of Intellectual Property 



By Dr« L« H« Baekeland 



x^" 



PROTECTION OF INTELLECTUAL PROPERTY^ 

By Dr. L. H. Baekeland 

INTELLECTUAL PROPERTY RIGHTS 

The mass of unthinking people, as well as those whose views 
are predominantly guided by precedent, have little or no con- 
ception of the natural rights of intellectual property. It is 
difficult to. teach such people that adequate protection of in- 
tellectual property is abundantly more beneficial to the com- 
munity at large than to the temporary individual possessors 
of these rights. 

Yet these same people consider as sacred and inviolable any 
other property rights as soon as the latter relate to chattels 
or real estate, whether such rights were obtained by purchase, 
by inheritance, by gift, by privilege, by labor, or in any other 
way. 

Furthermore, the laws of all nations are very strict in pro- 
tecting such property rights, but do not concern themselves, 
beyond certain limits, whether the possessor of the property 
is morally entitled to it or not. Neither do our laws concern 
themselves whether the owner uses his property for good or for 
wrong, for the benefit of the community at large, or for the 
gratification of his own selfish purposes. From the standpoint 
of the law (with very few exceptions, such as, for instance. 
Board of Health or police-ordinances, or cases of so-called 
eminent domain), it matters little whether the private owner- 
ship of some property is a burden to the community or whether 
it is an impediment to the happiness or the free development 
of its citizens. 

Neither is there any dispute as to the time the ownership 
of such property should last. Except for restrictions put on 
ownership by taxes, property rights are practically perpetual, 
and can be transferred only by accepted methods as, for instance, 
sale, barter, inheritance, or donation. 

In some rare instances, there may be expropriation for public 
purposes (or eminent domain), but even then, some suitable 
compensation is usually made. 

All this is readily accepted as an axiom, as an underlying article 
of faith by all laws relating to property. Only the socialist 
dares dispute these rights, while even the single taxer admits 
them to such a decided extent that he desires to abolish taxes 
on all property created by labor or enterprise, so as to shift 
the burden of all taxation on unearned land values. 

When, however, it comes to recognizing the claims of owner- 
ship to intellectual property, the result of the truly creative 
effort of the citizen, right away we butt against some stubborn 
conceptions, which have petrified into the code of our long es- 
tablished laws. 

If Tom steals Dick's two dollar scarf pin, Dick will have little 
trouble in putting Tom in jail, even if Dick himself has obtained his 

1 Presidential address delivered before the American Institute of 
Chemical Engineers, at the Detroit meeting, December, 1912. Reprinted 
from Journal ofIndustrial and Engineering Chemistry, January, 1912. 

(I) 



pin by questionable methods. But when it comes to protecting, 
even for the short period of seventeen years, the most logical, 
the most legitimate personal property, intellectual property 
as embodied in patent rights, with all that it involves, with enter- 
prises depending thereon, based often on the work of a life- 
time, then our law courts are woefully deficient, on account 
of the uncertainties, delays and enormous expenses connected 
with the adjudication of patent rights. All this works over- 
whelmingly in favor of the litigant with the well filled purse, 
the large corporation. 

FUNDAMENTAL AMERICAN PATENT LAW 

Yet, no country in the world has expressed in a fairer and 
broader spirit the rights of intellectual property, than the 
United States, in Article I, Section 8, of the Constitution: 
"Congress shall have power to promote the progress of science 
and the useful arts by securing for limited times to authors 
and inventors, the exclusive right to their respective writings 
and discoveries." 

This proclamation lifted the right of a patentee at once far 
beyond the mere privilege conferred by most other countries, 
which grant patents not only to the real inventors or origina- 
tors, but also to those who are first to introduce unpublished 
inventions into their respective countries. With some legitimate 
pride, we can say that in this respect at least, American patent 
law stands head and shoulders above the laws of Germany, 
France and England. 

The principles of the right of intellectual property so clearly 
defined in our Constitution were repeated in the preamble of 
the French Law of Jan. 8, 1791, which declares: 

"The National Assembly, considering that every new idea 
whose manifestation or development may become useful to 
society belongs to him who conceived it, and that not to regard 
an industrial invention as the property of its author would be 
to attack the essential rights of man; considering at the same 
time how much the lack of a positive and authentic declaration 
of this truth may have contributed till now to discourage French 
industry by occasioning the emigration of numerous distinguished 
artists and by causing to pass out of the country a great number 
of new inventions from which the Empire ought to have drawn 
the first advantages; considering finally that all the principles 
of justice, of public order, and of national interest imperatively 
command that it determine for the future the opinion of French 
citizens with regard to this class of property by a law which 
consecrates and protects it. . . .etc." 

The wisdom of these provisions has been abundantly proved 
by subsequent events. Only a man stubbornly blind to evident 
facts will deny that just those countries which have the most 
liberal laws for patent protection are also those which have 
taken the lead in the industrial and scientific development of 
the world. No man was more imbued of the benefits of the 
patent system than Abraham Lincoln, when in i860, in his 
speech at Springfield, Illinois, he said: 

(2) 



"In the world's history, certain inventions and discoveries 
occurred of peculiar value, on account of their great efficiency 
in facilitating all other inventions and discoveries. Of these 
were the art of writing and of printing, the discovery of America, 

and the introduction of patent laws The patent system 

. . . .added the fuel of interest to the fire of genius, in the dis- 
covery and production of new and useful things." 

Up to about thirty years ago, our patent system covered 
tolerably well the purpose for which it was intended. It stimu- 
lated individual inventions and promoted numerous private 
enterprises. Since then, with the extraordinary growth of 
our nation, with the tremendous increase of agglomerations of 
capital for industrial enterprises, and more specially with the 
astonishing increase in the ramifications of applied science, 
our patent system has become totally inadequate to the needs 
of the country; it suits our new conditions in about the same 
way as baby clothes fit an overgrown boy. 

Our patent system, although based on an excellent fundamental 
law, has now degenerated into a set of exceedingly complicated 
technicalities of law practice, a system of legal acrobatics, 
whereby any contestation before the courts can be turned into 
"perpetual motion" to the advantage of wealthy litigants, 
and whereby the individual patentees of slender means and the 
small industrial concerns find themselves under smothering 
disadvantages when opposing rich antagonists. In this way, 
our patent system, instead of accomplishing its intended pur- 
poses of stimulating individuality, simply reinforces the rich 
and big industrial enterprises, and discourages the individual 
inventor unprovided with a liberal bank account. 

I shall not take up your time by repeating all that has been 
published lately on the subject, but refer you to the available 
printed publications: ["Abuses of our Patent System," L. 
H. Baekeland, This Journal, 4, 333; "The Incon- 
gruities of Patent Litigation, Ditto, 4, 785. "The United 
States Patent System," Robert N. Kenyon, Transactions 
of the American Institute of Chemical Engineers, Vol. IV, 191 1. 
"The Gist of the Supreme Court Decision in the Dick Patent 
Case, and of the Proposed Patent Law Amendments," Gilbert 
H. Montague, The Engineering Magazine, May-June, 1912. 
"The Sherman Anti-Trust Act and the Patent Law. The 
Supreme Court on Patents (The Dick Patent Case)," Gilbert 
H. Montague, Yale Law Journal, April-May, 19 12. Report 
No. 1 161, to accompany H. R. 23,417, August 8, 1912, Hon. 
W. A. Oldfield, Chairman of the Committee on Patents, Wash- 
ington, D. C] 

INCOMPLETENESS OF NEW RULES OF SUPREME 
COURT 

It i.=^ true that on November 4, 19 12, the Supreme Court of 
the United States has promulgated revised Rules of Practice 
for the Courts of Equity, which intend to simplify our methods 
of litigation. Unfortunately this is only a half-way measure, 

(3) 



leaving still abundant opportunity for the tactics of delay, 
chicane, and expense which have too much disgraced American 
patent litigation. 

These new rules might gain in efficiency, if they were supple- 
mented by the creation of a final court of patent appeals. They 
might be made incomparably more efficient if they could be 
strengthened by a system whereby the adjudication of the validity 
of patents does no longer devolve upon judges who do not possess 
the technical or scientific preparation required nowadays for 
discerning the merits of complicated patent questions. Some 
of the far-reaching details of scientific technology absolutely 
baffle the comprehension of those who have no preliminary 
technical or scientific training. Certain problems of chemistry 
and physics involved in many patent suits can no longer be 
understood by an intelligent judge, if he has not had long and 
systematic preliminary training in that branch of knowledge. 
I do not deny that an intelligent judge can be coached and 
instructed by long, tedious, time-robbing methods, even in in- 
tricate scientific problems; but his education has to be made 
over again for each special case. After you have made a chemist 
of him for one case, the next adjudication will require the knowl- 
edge of a physicist, an electrician, an engineer, and so forth. 

What would any judge say of a chemist or a mathematician, 
or an engineer, totally ignorant of the practice of law, who 
tried to conduct a law case in court? Such an amateur lawyer 
might succeed in doing so, but to what hopeless loss of time, 
misunderstandings, and confusion would this lead before the 
subject had been mastered to some extent. Yet this is exactly 
what happens with a judge whom we entrust to decide on the 
validity of a patent involving highly intricate scientific or tech- 
nical subjects. 

Judge Hand expressed himself very eloquently on this subject: 

"I cannot stop without calling attention to the extraordinary 
condition of the law which makes it possible for a man without 
any knowledge of even the rudiments of chemistry to pass 
upon such questions as these. The inordinate expense of time 
is the least of the resulting evils, for only a trained chemist is 
really capable of passing upon such facts, e. g., in this case, the 
chemical character of Von Furth's so-called 'zinc compound,* 
or the presence of inactive organic substances. In Germany, 
where the national spirit eagerly seeks for all the assistance it 
can get from the whole range of human knowledge, they do 
quite differently. The court summons technical judges to whom 
technical questions are submitted and who can intelligently 
pass upon the issues without blindly groping among testimony 
upon matters wholly out of their ken. How long shall we con- 
tinue to blunder along without the aid of unpartisan and authori- 
tative scientific assistance in the administration of justice, 
no one knows; but all fair persons not conventionalized by 
provincial legal habits of mind ought, I should think, to unite 
to effect some such advance." (See Parke- Davis & Co., vs. 
H. K. Mulford Co. Circuit Court, Southern District of New 
York, April 28, 191 1 — 189 Federal Reporter, 95.) 

(4) 



Even under the new rules, it will not be difficult to drag 
on a case by presenting an unrestricted amount of testimony- 
taken before an incompetent examiner, and by calculating 
every step so as to tire out your opponent and so as to induce 
the judge in doubt and error, by swamping him with endless 
contradictory expert testimony calculated to befog the issue 
instead of making it clear. Such tactics are relatively easy 
for the litigant who, for that purpose, can afford to pay accommo- 
dating experts and skillful lawyers. Even if at the end, the 
judge, after laborious and conscientious efforts, masters the 
technicalities of the case and reaches a good decision, much 
needless time has been wasted. All this might easily be avoided, 
and judges might be saved the trouble and responsibility of 
going in every single case through a different scientific or tech- 
nical training, if their intervention could be limited to what 
they are more competent for, namely, to determine what claims 
have been infringed and in how far this infringement entitles 
the patentee to damages. 

GERMAN PRACTICE OF SETTLING PATENT SUITS 
That such a method of settling patent suits is quite practical, 
is shown by the example of Germany. In that country, patents 
are allowed after preliminary examination, just as here; but, 
after the patent is granted, it can be attacked for annulment 
or revocation before a competent court in the Patent office; 
so that any party who is sued for infringement of a patent which 
he thinks is invalid, can avoid temporarily the adjudication 
of the infringement issue by starting an annulment or revoca- 
tion suit. In the meantime, the courts in which infringement 
cases are examined have to take the patent as it stands, and it 
is only left to them to interpret the scope of the claims, and to 
what extent these claims have been infringed. 

This relieves the equity court of all the complicated questions 
of validity or non- validity of a patent, and puts this whole matter 
in the hand of a properly constituted court of experts who can 
handle this subject with incomparably less hesitation, or delay. 
Besides this, the whole system of practice in the German Patent 
Office tends towards systematic elimination of invalid patents. 
After an examiner has decided upon preliminary allowance of 
a patent, the claims and specifications are open for public 
inspection, and for a period of two months, anybody whosoever 
can file arguments against the final grant of the patent. In 
this way, the nation does not confer patent privileges too lightly 
and has, furthermore, the benefit of the free advice of any ex- 
perts in the art, who may advance good reasons for non-allow- 
ance of the claims, of which the examiner was not aware when 
he rendered his first decision. These opposition proceedings 
give added thoroughness to the work of the examiners. They 
are relatively inexpensive and do not necessitate the inter- 
vention of law counsel. Sometimes they delay the issue of 
a patent, if there is any good reason for doing so. On the other 
hand, a patent that has successfully withstood vigorous op- 
position proceedings is very much strengthened thereby; this, 

(5) 



in itself, is a very valuable compensation for any delays to which 
the patentee may have been subjected. In other words, by 
that system, a good patent becomes stronger, while a defective 
patent application is easily weeded out. A similar system of 
public opposition exists here in the United States in relation 
to the granting of Trade-Mark rights, and seems sufficiently 
practical that it could be extended to our methods of allowing 
patents. 

Such a sifting process, first by the examiner, then by opposi- 
tion proceedings, sometimes by annulment or revocation pro- 
ceedings for wrongly issued patents, involves no serious diffi- 
culties nor great loss of time if carried out by courts of experts. 
Thanks to such a system, the work of a judge who acts on an 
infringement case, gains considerably in dignity and is, at the 
same time, enormously shortened and simplified. (See Wert- 
heimer, The German Patent System, This Journal, 4, 464.) 

PROPOSED CHANGES OF AMERICAN PATENT OFFICE 

The German system throws the burden of technicalities and 
expert knowledge on the Patent Office, or the Courts connected 
therewith. Nothing would be easier than to introduce a some- 
what similar system in our country. 

All officers of our Patent Office, high or low, should be made 
independent of any political favoritism; they should be better 
paid, with more opportunity for promotion, according to merit; 
their work should be made simpler by an improved office equip- 
ment and increased facilities for a thorough search; further- 
more, our unnecessarily complicated and expensive methods 
of interference proceedings should be simplified. 

With these reforms, there is no doubt that we can organize 
right in the Patent Office, a competent court, supplemented 
by the court of appeals of the District of Columbia, for de- 
ciding, in a very expedient way, all questions of validity of 
patents. 

This court of appeals, because it is situated right in Wash- 
ington, would have easy and immediate access to all the records 
of the Patent Office; by this fact alone, it would have superior 
opportunities for prompt and efficient work. 

During the late years, Germany has been trying to broaden 
its patent laws more and more towards the principles set forth 
in the American Constitution. For instance, it has practically 
eliminated the system of compulsory licenses except in some 
rare instances where public welfare is involved. If only we 
could borrow some of the more efficient methods with which 
the German patent law is administered, and enforced, w^e might 
succeed in making an American patent real property for poor 
and rich alike, instead of a pretext for expensive and endless 
litigation with all the advantages it gives to the richer litigant, 
to the detriment of the consumer who, in the end, pays the bill. 

DEFICIENCIES OF PROPOSED OLDFIELD BILL 

At least some of these facts seem to have been very well 
recognized in the masterly report of Hon. William A. Oldfield, 

(6) 



chairman of the House Committee on Patents. (See report 
No. 1161, on H. R. 23,417, Aug. 8, 1912.) 

Unfortunately, his proposed Oldfield Bill (H. R. No. 23,417), 
with a regrettable lack of consistency, neglects utterly the 
paramount issues, and busies itself with secondary regulations- 
which, if carried out, will practically put a penalty on patented 
articles. 

The new provisions of the Oldfield Bill aim at curtailing the 
power of patents in the hands of trusts or large corporations; 
but, in doing so, new provisions are introduced which will create 
endless new opportunities for protracted litigation. 

The Oldfield Bill overlooks the axiom that whatever in- 
creases the expense or delays of litigation is a very potent weapon 
in the hands of large corporations, which they can hurl against 
the poor litigant who stands in their way. 

The saddest thing of all is that the new Oldfield Bill tries to 
abrogate the hitherto accepted principle established by our 
Constitution, that a patentee has the right to license or sell 
his patent on whatever terms he pleases. It has been feared 
that this principle, if carried too far, might become a dodge 
for avoiding Anti-trust Laws. Since the decision of the famous, 
but harmless, Dick case, the most hysterical exaggerations 
have been published on this subject. Fortunately, since then, 
the recent and unanimous decision of the United States Supreme 
Court in the "bath tub trust" case, Nov. 18, 1912, does away 
with all these redundant arguments and settles, beyond doubt, 
the principle that, patent or no patent, unlawful combinations 
in restraint of trade can be stopped by the Sherman Law. 

A PENALTY ON PATENTS 

The Oldfield Bill, in its eagerness to avoid any hesitation on 
this subject, goes one step further, and unfortunately one step 
too far. It puts so many restrictions on the sale of a patent 
article, or on a patent license, that it may become a positive 
disadvantage to transact business by means of patents. 

Examined in last analysis, it threatens a business based on 
patented processes or patented articles, with penalties which 
unpatented articles thus far are not subjected to. It takes 
the proposed patent law as a pretext for saddling a patented 
article with restrictions which have not heretofore been formu- 
lated for non-patented goods. 

This unexpected paradox, promoted by the Oldfield Bill, 
is distinctly in opposition to the rights of intellectual property 
conveyed by the words and the spirit of the Constitution, and 
if the Oldfield Bill becomes an effective law, it will be the saddest 
blow ever given to our patent system. It will do comparatively 
little harm to large business interests, because for them there 
are many ways of circumventing its provisions; on the other 
hand, it will cause great discouragement to smaller enterprises 
who, until now, have held the hope of matching inventive genius 
and initiative against the money power of big organizations. 
Make a large corporation respect the patents of a small concern, 
or of an individual, and you reduce at once any advantage of 

(7) 



size or money power, and at the same time, you encourage the 
most beneficial form of competition — competition based on 
improvements. But to introduce curtailing restrictions for 
the licensing or selling of patented articles or patented processes 
to which non-patented articles are not subjected to, means 
simply obliterating the value of patents while needlessly in- 
creasing still further the opportunities of endless and ruinous 
litigation and chicanery. 

SUPPRESSION OR NON-USE OF PATENTS 

Another unfortunate miscarriage of purpose in the Oldfield 
Bill is its provision against so-called wilful "suppression" or 
"non-use" of patents. It does not take into consideration 
that in numerous instances a patentee or an assignee possesses 
a series of so-called alternative patents, which can be used to 
bring about identical or similar technical results by modified 
means. Among such alternate patents, the best or the most 
suitable is used, absolutely irrespective of any other reason or 
intention to suppress their use. Yet without the exclusive 
possession of every one of these patents, the invention would 
not sufficiently protect against competitors, and the field would 
be so much reduced as not to make it worth while to put one's 
best energies to the development of the invention. In most 
cases, it would become a material impossibility for a small 
concern to maintain the exclusive ownership of its patents, 
if it had to go to the enormous expense of working simultaneously 
all its "alternate" patents; by omitting this expensive tech- 
nicality, it would be exposed to the risk of being compelled by 
its competitors to grant a compulsory license; this would prac- 
tically annihilate the advantage of exclusive ownership as 
expressed by the Constitution. There again large concerns 
would be at an overwhelming advantage because they can, at 
an expense relatively small for them, equip the necessary ap- 
pliances for remaining within the technical provisions of the 
law. In the meantime, they could easily harass their financially 
weaker competitors by exacting from them compulsory licenses 
which would break up the only prospects of successful competi- 
tion which the smaller concern might have possessed, until 
then, in its patents. 

In other words, the Oldfield Bill is aiming at the petty side 
of the situation and, in doing so, has unwittingly picked out 
a vital spot of our patent system. It reminds one of the man 
who set his bam afire in order to drive out a hornets' nest. 

I have no doubt that this bill has been framed with the best 
intentions for the interests of the country. Unfortunately, 
the framers of this bill do not foresee the far-reaching and dan- 
gerous effects of its provisions. 

ONE-SIDED POPULAR CONCEPTION OF INVENTIONS 
The average man, even the average legislator, has a rather 
one-sided conception of patents or inventions. Most people's 
idea of a patent does not go far beyond some simple mechanical 
device, like a patented mole- trap, a safety razor, an alarm clock 

(8) 



or other similar invention, more or less easy to understand after 
the apparently simple mechanical principles have once been 
explained. Then everything seems so simple and easy to them 
that their limited imagination cannot conceive how even these 
apparently simple devices have frequently cost incredible 
efforts and immense amounts of money before their advantages 
become available to the public. 

This attitude of mind develops, naturally, the belief that a 
patentee has a "soft snap," the result of a lucky idea, in about 
the same way as a lucky prospector strikes a rich gold mine, 
or a lucky ticket draws the grand prize in a lottery. 

Precisely on this account, it becomes difficult to explain to 
such people the rights and purposes of intellectual property; 
it is still more difficult to convince them that the nation is greatly 
benefited by liberal patent laws. 

When it comes to chemical patents, the ignorance of the 
average public is amusing if not pathetic. Since we have heard 
a New York alderman in an official address of welcome to the 
members of the International Congress of Chemistry speak as 
if they were druggists or pharmacists, we must no longer be 
astonished if the average Congressman or Senator refers to a 
chemical patent as a synonym of "patent medicine." 

FAR-REACHING EFFECT OF CHEMICAL INVENTIONS 
But it is even difficult for the better prepared legislators 
to understand how some chemical inventions have brought about 
the most far-reaching developments, not only in other industries 
and arts, but in civilization itself. For instance, it is not so 
obvious to them how processes for fixing the nitrogen of the 
air, or extracting soluble potassium salts from rocks, enable us 
to make food supplies independent from the restricted potash 
mines in Germany or the nitrate deposits in Chili. Such in- 
ventions are no more nor less than means for preventing possible 
starvation of our race. Do they realize that the development 
of the automobile, with all that it directly and indirectly im- 
plies, was entirely dependent on Goodyear's vulcanizing process 
of rubber? Shall we remind them of the fact that without the 
invention of explosives like dynamite, gigantic engineering 
enterprises, the Panama Canal, blasting of rock for the exca- 
vation of our cities, mining for ores, tunneling and grading of 
railroads, would be impossible? How could we expect even 
the most perfected modem printing presses to distribute to every 
citizen, rich or poor, young or old, that knowledge and culture 
which means better citizenship, better opportunities for happi- 
ness and development of our race, if it were not for the inex- 
pensive and abundant supply of paper furnished by the cellu- 
lose processes. The Greeks, the Romans and even the Middle 
Ages had their sages, their poets; yet those were the times of 
slavery and oppression, because knowledge was in the reach of 
only such a limited number that it was possible for tyrants to 
throttle its diffusion by sending the few advanced thinkers to 
the gallows or burning them alive. For the same reason, scarcity 
of books, the destruction of the library of Alexandria was a 

(9) 



calamity for the intellectual development of mankind. Our 
abundant supply of cellulose makes a repetition of such condi- 
tions an utter impossibility. 

Then again, where would we find our supplies of steel, the 
main raw material for modern engineering, if the Bessemers, 
the Thomas-Gilchrists and others had not invented their pro- 
cesses? How about the marvelous syntheses of products de- 
rived from coal tar, which have literally created the most as- 
tounding series of new substances, which have revolutionized 
therapeutics, surgery, hygiene, and are finding daily new ap- 
plications in the most varied arts and in general technology? 

INCREASED COST OF LIVING IN RELATION TO INVEN- 
TION AND PATENTS 

At a time when all countries are confronted with that critical 
question of the increased cost of living, it may be interesting 
to point out that just those industries where invention and 
patents have played the smallest role, are also those where the 
increase of price is most burdensome, while those commodities 
where patented inventions have had the fullest influence, have, 
on the contrary, decreased in price and, in some instances, to 
an astonishing degree. 

For instance, the price of sulfuric acid is about fifteen times 
less than it was in 1807, and about one-half of that of 1870. 
The price of soda ash is about one-sixth of what it was in 1823, 
and about one-half of the price in i860. Nitric acid sells for 
less than one-half the price of 1861. Glycerine sells for about 
one-eighth of the price of 1855. Chloride of lime in 1800 sold 
for 30 cents a pound, in 1870 for about 2 cents per pound, to- 
day for about i cent a pound. Any chemist knows that every 
one of these products is used directly and indirectly in the most 
ramified channels of our arts and industries, but the layman 
does not know that cheap soda means cheap soap, cheap paper, 
cheap glass, etc., that cheap sulfuric acid means cheap fertilizers, 
better crops, cheaper corn, cheaper wheat, and so forth. 

Let me point out that the decrease in price of these materials 
is even considerably greater than the bare comparison of figures 
indicates, if we take in consideration that the purchasing value 
of money has considerably decreased, while the cost of labor has 
enormously increased. 

Nor are these examples merely confined to chemical products. 
The reduction in price for articles where patents have played 
an important r61e, is just as evident in steel products, tools, 
machinery, etc. 

Compare these lower prices with the vastly increased cost of 
rents, clothing, food-stuffs, q,nd many agricultural products, 
where patents have played a less preponderant role. If you 
will carry your analysis still further, you will find that in such 
branches of trade where patented inventions have had little 
or no importance, for instance, cattle raising, prices have soared 
highest. On the other hand, for such agricultural products 
where patented machinery could be used to best advantage, 
like wheat and com, the increase of price has been relatively 

(10) 



small. Then again, garden vegetables, potatoes, etc., where 
the use of patented agricultural machiner>' is less available, 
show an enormous increase in price. 

You may object that the price of shoes has gone up, but here 
again, the increase is entirely due to the greatly advanced price 
of hides, and were it not for the perfected shoe-making machinery 
and for the better and cheaper chemical tanning methods, all 
due to patents, the cost of our shoes would be so high that they 
m^ight again become an article of luxury, available only for the 
well-to-do. 

The present price of clothing is high enough as it is; neverthe- 
less, it would still be much higher but for the patented machinery 
for spinning and weaving, the patented chemical processes of 
bleaching, dyeing, mercerizing, etc. 

I should not omit to mention our vastly improved and cheap- 
ened methods of transportation, of production of power and 
light, all developed and perfected on an interwoven system of 
patents; I could explain the far-reaching influence thereof on 
civilization, culture, on the happiness and security of life of the 
individual citizen; but even, then, I might not convince the 
pessimist or the scoffer who sees only the hole in a doughnut 
and stubbornly persists in ignoring the doughnut itself. 

THE GENESIS OF AN INVENTION AND THE RISKS OF 
PIONEERSHIP 

The history of almost every invention which we are utilizing 
now, unconsciously, every day, is an epic by itself, the details 
of which are known only by the few pioneers who gave the best 
they had to give, who helped with their brains, with their money, 
and talent of organization: some with their very lives. 

The often repeated statement has been made: "An inventor 
cannot help inventing, whether you give him a reward or not." 
Then again, some others say: "Necessity is the mother of in- 
vention." 

The most apparent fact is that the man who receives an ample 
income from his father, or some other privileged source, is less 
prompted to distinguish himself by arduous creative work 
on inventions, than the poor but intelligent man who sees in 
invention a means of making himself financially free and in- 
dependent, as well as giving an outlet to his inventive abilities. 

Whoever has followed intimately the development of some 
chemical processes, knows very ^yell that whether "the inventor 
carmot help inventing," or whatever may be the incentiv^e to 
invention, most of these important inventions could never have 
been carried out, or could never have been brought to the point 
where they became of public benefit, but for the intelligent use 
of vast sums of money. Too few people have a conception of 
the immense sacrifices, of the serious money risks, involved 
in the development of some patents. Many chemical inven- 
tions, used now currently and open to the public at large, have 
cost millions before they were brought into practical shape, 
or before the public was educated to their advantages. Can 
any one expect that such expenses, such efforts, such risks, 

(II) 



would be undertaken, unless there was the possibility of at 
least some chance of recouping by a temporary patent protection? 

THE LARGE GERMAN CHEMICAL CORPORATIONS 

Let us take, for instance, those large German chemical com- 
panies which employ hundreds of chemists and engineers, 
engaged exclusively in research work; to them, we owe the de- 
velopment of many processes which have had an untold bene- 
ficial influence in many directions on the economics of our 
daily life, even on civilization itself. They employ large ag- 
gregations of capital, reaching into many millions. The divi- 
dends of some of these companies may appear large to the super- 
ficial observer. Yet if you look more closely into it, you will 
find that these very companies were founded long ago, some 
of them over half a century or more, that the large capital 
which they employ has never been "watered,'.' that although 
they have had the benefit of the devoted cooperation of an 
endless number of distinguished men, stars of first magnitude 
in their profession, the net returns on their invested capital, 
at the end of half a century of brilliant intellectual pioneer 
work, is relatively small, even if the dividends seem large. 
In fact, the net returns are decidedly lower than that of many 
American enterprises not over fifteen years old, and where pro- 
gressive technical leadership was entirely lacking, but where 
tariff privileges and agglomeration of competing concerns, into 
a trust, insured a splendidly paying monopoly, notwithstanding 
the reckless financeering of their promoters. 

If you will further investigate the history of those German 
chemical concerns which have become leaders of the industrial 
world by nothing but their intellectual pioneership, you will 
find that notwithstanding all the patents on which they have 
to rely, the expenses involved in research work and pioneership 
swallow up, to a large extent, the profits realized in some of 
the established branches. But with true scientific spirit, their 
far-sighted directors were willing to sacrifice a very considerable 
part of their earnings, in their search for improvements and 
development of new ideas; they have set a magnificent example 
in the only competition beneficial to the public, competition 
by improvement. 

One of our wealthiest retired multi-millionaire manufacturers, 
not so long ago, speaking about his money successes, gave the 
following advice: "Never be a pioneer; it does not pay. Let 
the other man do the pioneering, and then after he has shown 
what can be done, do it bigger and more quickly; but let the 
other man take the time and the risk to show you how to do it." 
To anyone who advances the statement that an inventor "can- 
not help inventing," I desire to ask whether an inventor will 
do much inventing, if in order to carry on his research work, 
or to develop his invention, he has to spend hundreds of thousands 
nay sometimes millions of dollars, but does not possess them, 
and nobody is willing to take the risk to furnish the money 
unless there is a fair chance for his backers of obtaining some 
compensation by a temporary patent protection? Those who 

(12) 



know the large sums of money which have been swallowed up 
by the research and development work connected with the 
artificial production of nitrates; with the Solvay soda process; 
the development of the steam turbine; electric light, elecric 
traction, and numerous other inventions of far-reaching magni- 
tude, will know what I mean. 

Just on this account, it is highly unreasonable of the Oldfield 
Bill to try to make a distinction between the inventor in whose 
name the patent is drawn, and the party who runs the risks 
in enabling the inventor to make the invention available to 
the public; any such legislation simply tends to discourage those 
who, at considerable risk, furnish the capital and the talent to 
develop an invention into a commercial possibility, and who 
thereby bring it into real public service. 

THE GAP BETWEEN INVENTION AND COMMERCIAL 
SUCCESS 

Now and then, I have perceived that some of my fellow 
chemists who, although highly trained, have never created 
anything of technical value, and whose experience with matters 
of practical life frequently extends not beyond the confines 
of their lecture-room or their laboratory, do not seem to grasp 
fully the immense distance that lies between the initial concep- 
tion of an invention, or its study in the laboratory, and the over- 
whelming amount of careful work and money risks connected 
with its development on a commerical scale, until it has safely 
reached the point where the public can avail itself of the inven- 
tion. 

I wish to cite, for instance, the famous Solvay process, which 
gives us cheap, excellent and abundant soda, an article of promi- 
nent importance in the wheels of our civilization. This process 
was known and described more than a dozen times, and had 
even been tried repeatedly at considerable loss, on a commercial 
scale, many years before Solvay tied his genius to this difficult 
problem and developed, from an unreliable laboratory reaction, 
a process of great industrial importance; then, with a staff of 
able collaborators, and the employment of large amounts of 
cash, he overcame, by and by, the technical drawbacks which 
had caused the failure of all of his predecessors. 

Hundreds of similar examples could be cited. Whoever 
has been intimately acquainted with the commercial develop- 
ment of some of the most successful inventions, knows quite 
well the risks, dangers of failure, which have accompanied the 
herculean task of development and educational work. It is 
a well established fact that the great majority of new enterprises 
fail; that few succeed. 

THE EDUCATIONAL EFFECT OF INVENTIONS 
The educational effect due to the introduction of patented 
inventions is of immense benefit to the public, although this 
fact is not very apparent to most people. In many instances, 
the owner of a patent frequently has to go to extreme sacrifices 
before he succeeds in convincing the public of the merits of 

(13) 



his invention; in fact, the public stubbornly refuses to benefit 
by an improvement to which it has not been fully educated. 

The practical value of cash registers became obvious only 
after a most thorough and very expensive educational campaign. 

The metric system is just as useful as the cash register; it 
was invented long ago and systematized in all its details during 
the first French republic. Nevertheless, to-day, there are still 
two large commercial countries, the United States and England, 
which have not yet been educated to its merits; if the metric 
system had been patented, like the "cash register," somebody, 
during the seventeen years of the patent monopoly, would 
have undertaken the money risk and arduous task of thoroughly 
explaining the advantages of the metric system to our conserva- 
tive citizens, and we would have ceased long ago to submit 
to the burden of waste of time and money caused by our anti- 
quated, cumbersome system of weights and measures. 

It has been stated, with much reason, that the best way to 
postpone the benefits of an invention, is to allow public use of 
a patent, because then nobody takes the risk of starting an 
educational campaign or of developing the invention, which 
after all means pulling the chestnuts out of the fire for the bene- 
fit of others. 

Entirely new industrial enterprises are not easily started on 
inventions which are not patented, unless some other method 
is available for insuring some kind of a monopoly; for instance, 
by maintaining secrecy or by acquiring special skill, or by con- 
trolling the raw material, or by tying the market, or in other 
instances where the initial outlay for a plant requires a capital 
so large as to exclude others. 

Moreover, if you scrutinize those industries where secrecy 
of methods, instead of published patents, is the prevailing tend- 
ency, you will find that the secret-process-industries are pre- 
cisely those which have least progress to record, and where high 
prices rule. 

Whoever desires to get posted on the modem literature 
pertaining to any industrial chemical process, will find that 
available text-books are many years behind in information as 
far as novelty and accuracy are concerned; for this reason alone, 
it is absolutely indispensable to get acquainted with all recent 
patent literature. 

Were it not for the compensation expected from patent rights, 
most of this information would be carefully kept secret, or if 
it were divulged at all, this would mostly occur by accident. 
Every newly published patent sets to work the thinking cells 
of numerous inventors, who are not slow to suggest further 
possible improvements. Every patent of some importance 
is rapidly followed by a succession of other patents conceived 
by other inventors, who were inspired by their predecessors, 
and so the work of progress goes on unceasingly and at a quick- 
ened pace. 

In the age of the alchemists, there were no patents; inventions 
and discoveries were jealously guarded and buried with their 
originators, and the world and its inhabitants remained very 

(14) 



much what they were with most rights and comforts in the pos- 
session of those in power, and very little chance of improvement 
for the non-privileged classes. 

WHAT SHOULD BE DONE 

The public should be educated in these truisms. Unfortu- 
nately, the education of the public has been directed in the op- 
posite way since patent infringers have utilized the daily press 
after the late decision of the Supreme Court in the Dick case, 
to start a campaign for urging our well meaning but ill -prepared 
legislators towards patent reform, which will give still broader 
scope to our modern buccaneers. This reminds us of the man who, 
after stealing a stranger's pocketbook, kept on shouting "stop, 
thief," so as to distract the attention from himself. 

Two ways are open for our legislators: 

One way is to try "to hit the trusts" by mutilating the best 
there is in our patent system, which has been such a potent 
factor in the development of our country; to chill the best 
incentive for private enterprise; to stunt that kind of competi- 
tion most beneficial to the public, competition by improvement, 
incomparably better in this respect for stimulating industry, 
science and progress, than protective tariff privileges which, 
in many instances, have worked in the opposite direction. 

The other way is not to put dangerous restrictions on the patent 
rights defined by our constitution. If there has been any fear 
that such patent rights might be abused for evading the pro- 
visions of the anti-trust laws, these apprehensions have vanished 
by the clear unequivocal decision of the Supreme Court in the 
Bath Tub Case. 

But there is urgent need of reform in our patent system by 
simplifying procedure in the Patent Office as well as in the courts, 
by insuring better, quicker and less expensive means for ad- 
judicating the title and validity of patents. Only such a re- 
form will bring about that big or small, poor or rich alike may 
be stimulated by the advantages of our patent system, instead of 
making a patent an expensive but powerful instrument, avail- 
able only to the wealthy. 

Whatever simplifies and lessens the cost of the administra- 
tion of our otherwise excellent fundamental patent law, gives 
the enterprising man with small means a better chance of compe- 
tition by inventive progress and merit against ponderous ag- 
gregations of capital. By such reform, which insures such 
healthy competition, the nation is sure to be benefited. 

In all above considerations, my remarks were principally 
inspired from the standpoint of chemical patents, not alone 
because this very important class of patents is least understood 
by the average public and the legislator, but because chemical 
process patents are also those which are most difficult to protect 
from infringers. 



(15) 



OCT 1019 14 



.^^ 



I TBRARY OF CONGRESS 

MHIi 

C7i W19 935 67b O 



